893.00/15399: Telegram
The Ambassador in China (Gauss) to the Secretary of State
[Received 2:40 p.m.]
926. Comment by other Chinese neutral observers on CEC session concluded May 27 reveals unanimity of opinion [that] liberal elements suffered thorough defeat and CC clique firmly in control of party (Embassy’s 919, May 27). Reported that Sun Fo proposal to extend session 2 days to allow discussion democratic reforms rejected. Political Science Group apparently without influence in session. Generalissimo said to have stopped interpellation T. V. Soong during report on foreign affairs. CC clique said to have maneuvered dismissal Chu Chia-hua on grounds latter is known Fascist, German returned student and cause of party’s lack of democracy. CC now expected to exert every effort to broaden and strengthen its organizational hold on party with aim of achieving complete control of elections under constitutional government. Some Chinese say session showed dependence of Generalissimo on CC group, while others say Generalissimo could not “lose face” by carrying out reforms suggested by foreign and domestic critics and thus admitting validity such criticism.
Ta Kung Pao and Communist paper reported meeting five industrial and manufacturing associations May 24 at which appeal made for democratic government and protection development private industry. Associations drew up joint proposals for solution current political economic problems for presentation to CEC but press not permitted to publish text. Other appeals for democratic government reportedly submitted to CEC by small group Kmt members and by 2000 Government employees.
Liberal elements apparently feel that liberal group in Kmt can never gain ascendency in party in view developments this CEC session. Neutral Chinese say present trends show Generalissimo and CC clique are laying foundation for future with aim of insuring control of party and that liberal elements must now look for other leadership outside Kmt. Such leadership might now gain support from industrial elements above-mentioned as well as intellectuals and professional classes.
Central News reports CEC decided to establish “new and powerful organ for unified price control” and it is rumored Commodity Control Board with H. H. Kung as head and Hsu Kan (Minister of Food) as deputy will be set up superior to Executive Yuan and responsible apparently only to Generalissimo.